A Branding Dilemma: Selling Upmarket Without Losing Out on the Middle

When trying to reach your target audience, there's often a fear of leaving money on the table as you choose to focus on one segment of the market over another.

Jeff Cayley is the founder of Worldwide Cyclery, an epic bicycle shop on a mission to redefine what a bike shop can be online and in-store.

On this episode of Shopify Masters, he'll share why he only lists a handful of products on his site (despite having a catalogue of over 20,000), focusing his online brand on high-end bike owners because that's the way they shop.

"What is your ideal target customer and what do they want to see on your website—put that on there."

Tune in to learn:

Why you might need a demo program to sell an expensive product.

How to decide what to sell and where when you have multiple sales channels.

How to transition from learning to execution.

Listen to Shopify Masters below…

Download Shopify Masters on Google Play and iTunes!

Show Notes

Transcript:

Felix: Today I’m joined by Jeff Cayley from worldwidecyclery.com. That’s W-O-R-L-D-W-I-D-E-C-Y-C-L-E-R-Y.com. World Wide Cyclery is an epic bicycle shops on a mission to redefine what a bike shop can be online or in store, stocking all the good stuff. It was started in 2011 at Bayside Newbury Park, California. Welcome, Jeff.

Jeff: Hey. Thanks, Felix. I appreciate you having me.

Felix: Yeah. Excited to have you on. Bike shops. You have one online, you have, I guess, a retail store as well. Tell us a little more about it. What are some of the popular products that you sell online or in the store?

Jeff: Yeah, sure. I started business in January, 2011. In the bike shop world, pretty much to even be a player in the game it’s kind of an industry requirement to actually have a retail store. That’s just kind of how it works in the industry. Unfortunately it’s not one of those things where you can just get an account and start selling stuff online. It’s one of those things where there’s a little bit of a barrier to entry and you do need a retail store to kind of just be a player. Yeah, launch the store in early 2011 and it was just a little, small retail shop. My focus with it always was to focus on the high end.

My background, I road and raced bikes my whole life and absolutely loved it; really passionate about building bikes and the different types of bikes there are and that sort of stuff. I really liked the high end stuff because that’s what I was into as a racer and being into the industry for so long. Yeah, I was 21 when I started it. The original building was a thousand square feet, so a tiny little bit of retail shop up the front and then we had sort of just some office space, a little shipping table, and it was kind of a little hole-in-the-wall operation at that point when we started it.

It’s evolved quite a bit from there. Now were at about a 5,000 square foot building; retail stores in the front, the office space is in the middle, and all the warehouse and mechanic work takes place in the back. That’s what’s going on there. Our kind of niche we’re really not entirely niched into the high end segment of the mountain bike world, but that’s where we predominantly play and where most of our customers go.

We do try and cater a little bit to the road side of things and the commuter style cycling bikes as well but our main focus and what we’re best at, core competency you could say, would be the higher end mountain bike scene. Bicycles get expensive. People that are super into them, it’s a pretty common thing to have a bike that’s 5,000 dollars plus so for us it’s 7,000 to 12,000 is kind of the average bike that we build and sell here and, yeah, we do a good bit of business in the retail store but it’s predominantly online. We’re about 85 percent online is what we do.

That’s really the main focus. The retail store, like I said, is kind of an industry requirement so that’s why we have a retail store. If we have a choice we probably still would. It does help to build legitimacy and give customers sort of that ability to buy stuff online, pick it up in the store, and it’s also nice some of the products we sell, you know, complete bikes. People can come in here, test ride them: touch, see, feel it, that type of thing which is nice when you’re selling a really high price point product. Yeah, that’s kind of the rundown of the shop.

Felix: You mentioned that you started this when you were 21 in a thousand square foot retail store; much bigger now, but even back then a thousand square feet for someone that’s 21 … It sounds like a pretty big investment. It’s going to cost some money. Did you take on any investors early on? How did you fund the very early days of getting a retail store off the ground, especially that, and then on top of that, the inventory?

Jeff: Yeah. What I did was … Big shout out to my parents, they were super supportive of me. At that point I basically asked for a 20,000 dollar loan from my mom and she gave it to me at a ten percent simple interest rate. She made out on that one a good bit. I paid her back within the first year. Then my dad being the supportive guy that he is, he helped me lease the building. We utilized his credit. He was the part owner in the company basically just for credit reasons and helped me cosign on the lease of the building. That’s how I did it.

I used the 20,000 dollars to fund the first little bit of inventory and put some stuff inside of the building and then utilizing my dad’s credit to be able to lease that building. Then from there I was also working a second job. I was working a job and that was the all time backup plan. I was like, “Okay, if we don’t make enough profit to actually pay the rent on this place I at least have a part time job so I can fund it that way.”

I mean, that’s kind of the definition of bootstrapping, right? I would typically wake up at five a.m. and get to the shop 5:30 or so, 6:00 in the morning and I would just bust out everything I could until about 2:00. Then I would take off. I’d work another job two to seven. I’d do that then I’d go back to my shop and then I would work there from about seven to nine p.m. and then I would try to get to bed by ten. I did that for a solid two years, just really hustling and not sleeping very much. I had a very different life as a 21 year old kid.

All of my friends were kind of interested in going out, and partying, and getting hammered every weekend and I was just putting my head to the ground and working 16 hours a day. Luckily it’s all paid off and it wasn’t an epic failure, which you know, could have happened, but it worked out. That’s kind of how I was able to pull that off. It was hard work and then a lot of incredible support from my parents.

Felix: Did you close the store down then while you were working a second job like during the day or did you have someone step in and look over the store while you were out?

Jeff: I did. In the early days when it was just me, because it was such a tiny podunk retail store nobody was really coming there anyway, so we were able to … I would just lock the door and no one really showed up so it didn’t matter. The main focus from the beginning of the shop was always to be predominantly online. I’ve been in the industry for a while, I saw that that’s the way that consumers were going is buying a lot of these products online so seeing that trend really made me think like the typical, local bike shop … It’s just an evolution.

The higher end segment of it, a lot of that stuff wasn’t stocked in stores, so you had to go to the bike shop and special order the product anyway and then they would order it from their supplier or manufacturer and then you would end up having to come back a few days later and pick up the product. A lot of the guys that were into the higher end stuff, they already knew it wasn’t in the store, like they just knew it wasn’t there. They were buying the stuff online. That’s kind of … The higher end market was what pushed a lot of the products online to begin with just because of consumer demand.

Because of that, that was the main focus and I knew that was the direction I wanted to go. From the beginning I didn’t really advertise the retail store at all. I wasn’t trying to drive foot traffic by anyway, shape, or form. I was just really focused on the lowest hanging fruit, which at that point was, “What do I know is a top selling product in the industry, what do I know is going to” … “Something I’m going to be able to put on eBay and it be able to sell quickly and we can actually make a profit.”

The initial idea was like get the shop, build it out, have the distributor reps come by and say, “Okay, this barely passes but it passes and you can have an account with us now as a distributor.” Once they gave the account to me it was like, “All right, now we just got to pick and choose the popular stuff and maybe bring one or two of them in store or maybe just see that, okay, they have 50 so I’ll just post five of them on eBay and try and sell them.”

That was the quickest way to market, really, for me. That’s what I would do while I was there. Because I wasn’t really driving much foot traffic I would just leave and kind of just made … The hours of the retail store were whenever I was there. That’s how it was for quite sometime. I had a friend helping me early on that I would try to get to be there, you know, help me out. He ended up, unfortunately, not working out after about eight or nine months.

He was a great guy, still friends with him, love him to death but he wasn’t quite ambitious about business as I was at the time and a little more concerned with doing the usual 21 year old kid stuff. Because of that we traded him out eventually for another friend of mine who came in, I think, after about a year and a half of the business being open and he’s still with the company today. He was a huge help but for that first year it was pretty much just me running the show and the store hours were whenever I was there.

Felix: You mentioned that the main focus in the beginning was always to focus predominantly online. What made you say earlier on that you must have a retail store in this industry?

Jeff: Yeah. It’s just kind of one of those … I’m sure there’s some other retail industries that are like that, right? Because I think one of our main differences compared to some of the other ones I’ve heard on your podcast before … A lot of the people you interview are manufacturing their own products.

We’re not doing that. We’re just retailing a lot of higher end brands. A lot of those brands are selling directly to retailers, which would be bike shops or they’re selling directly to distributors which didn’t sell to bike shops. The way that model works in the bike industry … I’m sure it’s probably like that in a few others but, basically, they don’t want to sell to Joe Schmoe in his garage because if they did that then he has no overhead, he doesn’t have any technical knowledge of the product, and then he just tosses it up on the internet for a super low price, and then a customer has a bad experience with it because he sold it incorrectly or wasn’t able to educate them on how to install the thing.

There’s a lot of technicalities to the products we sell. Because of that the industry sort of demands. They say like, “Hey” … This is kind of like the manufacturers and the distributors decided this together, you know, probably before I was around and they said, “In order to give an account and sell to these people at wholesale cost, they need to have a real retail store. They need to have education on a product. They need to have a place to actually work on the products and a bike stand in there. They need to have some other brands that they’re carrying.” Things like that.

It’s really just a total industry requirement because these distributors don’t want to sell to any old random person, they want to sell to a genuine bike shop. Luckily that’s kind of the only requirement. It’s not like they’re saying, “A, you have to have a bike shop, and B, you have to spend ten grand with us.” Most of them are pretty lenient on that. They’re just like, “A, you have to have a bike shop,” and now you can kind of just pick and choose what you want to buy and they’re pretty lenient on how much you purchased from them initially. Yeah. That’s how that worked and why we decided to start the retail store off the bat.

Felix: The retail store is almost like a proxy to determine if someone is serious about the business or serious about the brands they’re repping or not. You mentioned that the representatives from these brands came out to check out your store in person. What were they looking for?

Jeff: Yeah, because it’s pretty well patrolled like that you’ve got the outside sales reps from the brands that you want to carry and the distributors you want to work with. They’ll actually come to your retail store. They want to see it. They want proof that you’ve got a real bike shop, that you’ve got tools there, that you’ve got square footage, and that it’s the real deal and it’s not just a … You know, you didn’t just rent your friend’s garage type of thing.

They just kind of come out and want to put a face to the name, and meet you, and check out your operation, and just make sure that you’re legitimate which is good because of all of that due diligence that they do on the retailers you usually end up with people who have skin in the game, people who do actually know the product and want to invest in selling those brands and being a proper retailer for all those higher end brands. I think it’s good that the industry puts that barrier to entry in there.

Felix: Once you have success like you do today and you have a track record with these brands, do you still need to keep a retail store open?

Jeff: You know, we do. There’s a couple players in the industry that don’t have retail stores but they’re monstrous. They’re 50 million dollar plus companies. Those guys have got away with not doing it but we do and some of the other, bigger guys as well, they could probably get away with not having it but they kind of want to. Because of the products that we sell and our competitors sell, the retail store definitely helps. Not only does it kind of bring legitimacy to you as a retailer but it does give the customer the opportunity to purchase online, pick up in store or come and actually test the product at your store, come and look at it in store and chat about it.

The way I see it at least, in our industry, the future of a top tier retailer in the bicycle industry is going to be very omni channel. It’s something obviously Shopify promotes all the time is being omni channel and it’s so true in the bicycle world. You know, retail storefront is a really helpful thing but you also have to mix that with a great e-commerce presence on your own website and on all third party marketplaces. That’s the way I see a top end retailer playing the game in the future and the way that we’re doing it now.

I think a lot of other retailers are kind of tagging along and starting to evolve that way. You’ve got the old school guys who are just running the retail store or trying to dabble and get into the e-commerce side of things and you’ve got the guys who are playing the e-commerce game really well but also see the value in doing both and having the retail store as well.

Felix: It’s not just trust from the manufacturers, the brands that you are representing, but then all the time you’ll see sites that if they have an email address, if they have a phone number displayed very clearly on their site it adds these kind of little trust factors in it because you recognize that, okay, it’s not just some fly by night kind of just put up some website and try to scam people. It’s tied to a real person, tied to a real business, but then once you have a retail store it’s even a bigger trust factor because this is a place you can actually go in person, see the products, see the people that work behind it. I think if you can hit on something, that kind of trust is … You bring so much trust by having a physical retail store, not just to the brands that you’re selling but then also to the customers that are buying from you.

Jeff: Yeah. Absolutely.

Felix: I want to go back and touch on something that you mentioned earlier about the part time job that you had. One concern that I’ve heard a lot of entrepreneurs talk about, or maybe warn other entrepreneurs about is that if you have a backup plan and you have a plan B, you’ll end up taking that plan B, that backup plan. Was that ever a concern for you at any point during the two years of that hustle, that grind of working these crazy hours? Did you ever think maybe I could just do something easier and go to work on a full time job essentially?

Jeff: Yeah. You know. There’s obviously a lot of different theories about that. Some people say, “Be paranoid and have a backup plan,” and then there’s the other theory that’s just like lay all your chips on the table and go for epic failure that way you won’t fail. There’s a lot of different theories on that. I mean, it’s probably different per person but, you know, for me it was I didn’t want to take the easy path. I think that’s a lot of a personality trait, right? The entrepreneurs you meet, the ones that actually have real success, like they earned it and they were very intentional about that success.

For me it was, yes, sure, I had a kush job. I was working at another shop at the time. I was employed well and getting paid fair and, you know, it was a decent environment and it was great but it was also a dead end job which I think a lot of people can say they’re in dead end jobs to some extent and that’s what I was in. I was so passionate about the products I was selling, about business, about entrepreneurship, about doing my own thing not only because like one … Of course I said I want to make a little bit more money and be able to enjoy a little bit nicer lifestyle, but it was really … That was a minute part of it for me.

For me it was really just … It would be so fun and just a challenge to build a business and I was so passionate about creating something and just doing something cool. I just personally inside at that point felt like, “I don’t want to be average. I don’t want to just be another person who has an average job.” I wanted to be that kind of person who did something a little bit unique and was an entrepreneur, and had a company, and had some success at it, and I cared about that. I cared about striving for some greatness and not going for the average, easy route.

I think for my personal experience that’s how it was. Because I cared about doing something unique, plan B, yeah, it was nice to have in case everything fell apart but I really was hustling, and cared, and had serious intention towards making a business a success because that’s just what I wanted, and I wanted it bad, and I was ambitious for it, and I went for it. The plan B was just there as sort of a safety net but it was definitely no way, shape, or form a consideration of me going back to it. Some pressure gets involved there too, right? I signed a one year lease on the building so there’s some pressure there.

I obviously didn’t want to fall back and take plan B and have to pay for the building. I don’t know. I think that’s kind of a … Boils down to who you are internally. I think having a plan B is good. I think that’s smart. You know, there’s some business adage. I can’t remember which business book it’s Only The Paranoid Survive. It’s just talking about being cautious with things and I think that’s a smart route personally, but everyone is different.

Putting all the chips on the table might work for someone. For me, I liked having that plan B and having that second job and having it as a backup plan to just be safe but at the end of the day I knew what I wanted and I was going to work super hard to make it work and I knew it was going to be better than plan B once it came to fruition.

Felix: One of the other things that you mentioned that you wanted to get to do from the get go was to focus on the high end. You wanted to have the high end products because that was what you were interested in. From a business standpoint though was there also any … I guess was there also a business aspect of that to focus on the high end rather than, I guess, the low end or the mid-tier?

Jeff: Definitely. I mean, the bicycle world, once you get into it, it’s very complex. I mean, you have everything from your 100 dollar bikes you see at mass merchant retailers like Walmart, and Toys R Us, and things like that and then you have your step above: your 300 dollar, 500 dollar bikes that you predominantly see on sales floors at your typical, local, independent bike dealer. That local, independent bike dealer might also have some higher end products there, some 2,000/3,000 dollar bicycles. For me, you know, I came from racing bikes and got really into the industry.

As you get more and more into something you want to try the nicer stuff, and the nicer stuff, and you save up your money to get the latest and greatest thing that was just released. Those were the products I knew the best. They were obviously the … It’s more of a niche market but obviously there’s more money in selling a 7,000 dollar bike than there is in selling three 300 dollar bikes. To me it was like, one the business sense made more sense because it was going for the high end.

If I was going to own a car dealership I’d rather sell Ferraris or Lamborghinis than sell Fiats, you know? I just kind of use that same thing in the bicycle world. I liked, knew, and care about the high end stuff. Obviously it was more lucrative so that’s where I went as opposed to targeting the the lower end stuff because … You know, I think it’s an element of passion too. I’m genuinely passionate to this day and always will be about high end, top tier bicycles and all the components that go on and then I love using them myself and I love selling them, that sort of thing.

I don’t really care for the cheap stuff. I know there’s a huge, mass market of selling beach cruisers for 100 dollars but, I don’t know, I can’t get excited about that and I’m not really in the business just to make a buck. I’m in it because I like high end bikes and I’m passionate about that. There’s a couple of reasons why I went to the high end side right off the bat.

Felix: Not everything on your site though is thousands of dollars. You’re saying some of these bikes or these frames alone are two, three, 4,000 dollars but you have, of course, accessories as well that are a lower price, but this guy gives you the full gamut of prices, right? From the not so expensive to the ones where you have to take a lot of time considering whether you want to buy it or not or do something more … Essentially price shopping even. Now, does that affect your marketing? How do you decide to market or display the products when it’s a, let’s say, a 6,600 dollar bike that I’m looking at right now versus a 30 dollar pair of gloves?

Jeff: It’s a tough line to cross because it’s almost an identity thing, right? It’s trying to say, “Who are you? Are you just a high end retailer or are you any other bike shop?” That’s been something that … That branding dilemma has been tough for us over the years because we have access, with all the distributors that we work with, to the gamut of cheaper stuff to the top tier stuff. We’ve found over the years as well that some of this mid range stuff actually sells really, really well.

It’s like, “Well, we don’t want to just not sell that product because we like high end bikes,” because then we’re just leaving money on the table but at the same time we don’t want to confuse our customers then they may be thinking we’re not the high end guys because we have this low end product on our site. It still is to this day. We don’t have it perfectly figured out. Obviously most of our branding, marketing, and promotion, all of that focuses on the high end stuff and when you hit the site, the home page, all you’re going to see is the high end stuff.

If you do your digging there’s some cheaper stuff on there. Whether it’s accessories or it’s even just components, like a suspension fork would be one of them. We always have all the top end stuff on there but cheaper suspension forks, which the higher end stuff would be around the 1,000 dollar price point, the cheaper stuff would be around the 150 dollar price point. we have all of it on there. We’ve got the 150 dollar stuff on there and the 1,000 dollar stuff on there.

Obviously we’re targeting and we try to really focus on what we consider A customers, which A customers are the people that ride 5,000 dollar plus bikes, they’re the people that buy the 1,000 dollar suspension fork. That’s who we market to in our target demographic but we’re still going to toss up these other items that we know can sell well and especially on third party marketplaces they sell well and especially things like Google shopping or even just organic traffic some of these products sell well. It still is a little bit of a tough identity crisis for us and we’re trying to do what we can to brand ourselves the right way but we have a big catalog, right?

We have a catalog of about 20,000 SKUs and a lot it … We stock a lot of it in our warehouse here, a lot of it’s stocked at our distributor that we just kind of do just-in-time inventory model with so it sells on our site or on a third party marketplace. We then order from our distributor, it shows up the next day, we ship it out. We do that with a lot of SKUs too. Because of that big catalog it is hard to say, you know, “We’re just this.”

It’s a tough one. We’re still trying to figure it out entirely but I don’t have a perfect answer. I would love to never sell any even mid range stuff ever again but I think if we did that we’d be leaving a lot of money on the table and cutting out a lot of revenue that we could be making just to kind of cater to a little bit broader of an audience and not go so niched.

Felix: When you do have a product like, let’s say, socks, for example, you’re selling socks as well on here which can’t get that expensive so they’re 15, maybe 20 dollars at the most, and then you have these 6,000 dollar bikes as well. Do you bother even marketing the accessories that are lower price point or do you focus all on the high end, highest price products, and then maybe they’ll come to the site and stumble on something to add into their car while they’re buying a much more expensive product?

Jeff: Yeah, we definitely … When it comes to what we spend our time marketing and promoting we definitely focus on the higher end stuff because that’s what we care about selling the most. It’s what we know the most about. It’s what we know we can make the most money on and it’s what we know with the customers we want to track by that stuff. That’s kind of our take on that one but, of course, the guy who rides a 7,000 dollar bike, he also might want some cool … Like one brand we carry is SockGuy and they have these super hilarious bicycle industry jokes printed on socks that would totally appeal to him so it’s a good upsell item. We’re not going to advertise socks by any means but we’re going to advertise other stuff.

We kind of have to pick and choose that way. The majority of our marketing efforts were pushing the expensive stuff. The other cheaper stuff, that’s just like if you’re on there and you happen to see it, it might be a good upsell or you might stumble upon it and be like, “I could use some of those as well.” We focus on the stuff that really that, you know, is what we’d consider would sell to an A customer and then all the other stuff is on there if you stumble upon it. Does that answer your question?

Felix: Yeah. That does. I was wondering if you do have such a wide range … For our listeners out there, they have such a wide range of price products. Should they focus on marketing and putt the dollars behind the kind of key products or should they kind of spread it out throughout all of their products. It sounds like your case, you focus on what’s most important to you guys which are the high end bikes and then if the traffic comes and decides to check out the other products and they buy, great, but again the focus has always been on the key flagship products for you guys.

Speaking of these 7,000 dollar bikes … It’s funny, every time I write down this question I want to ask you kept on bumping up the price of these bikes. They get even higher each time. A 7,000 dollar bike now. Do people actually buy these online? What’s the sales [inaudible 00:28:22] for something like this? Are they coming onto the site and just buying it right away or is there a much longer process, I guess, compared to the more cheaper products you sell on the site?

Jeff: To kind of preface this question, to give you a bit of a breakdown of the categories that we sell so … It all starts with bikes. However, a complete bike or a frame, that’s something that the diehard enthusiast might buy twice a year, the typical enthusiast might buy once a year, and the average enthusiast might buy once every couple years or once every three years. It’s not a high velocity item. What we predominantly move product-wise is components. That’s what people are buying all the time. You know, “Oh, a new handlebar came out,” or, “Oh, I crashed and scratched up my handle bar, I want to buy this one,” or all these little different components that go on the bikes.

The manufacturers are making them better, they’re coming out with new colors, or new styles, or lighter weight ones, or better performing ones and that’s the philosophy. That’s the high volume stuff that makes up the majority of our revenue is components. Whether it’s suspension forks, rear shocks, seats, handlebar stems, that’s stuff that moves all the time, that’s stuff that the enthusiast, you know the diehard enthusiast is constantly buying. A lot of our customers are more than once a month buying an upgrade for their bike, whether it’s this part or the other part. That’s the majority of … The bulk of our revenue is from those components. That’s just a matter of volume, right? Because like I said, people just don’t buy a frame or a complete bike as often.

Because of that we do put a lot more marketing dollars towards those components because we know they’re high velocity and they sell more. They’re also easier sales, because like you’d imagine an expensive bicycle … There’s a big sales cycle to that. If you’re going to spend several thousand dollars on a bicycle you want to do your research. You want to learn about it, you want to watch YouTube videos on it. Depending on where you’re at as far as knowledge, some people will just … Never ridden a bike, never even seen it. They just trust the brand that makes it and they look at the geometry and the specification and they just buy it.

Some people are like that. That’s probably a small percentage of the market. The majority of the percentage, they want to do a little bit more due diligence and some of them actually want to ride the things before they buy it. That’s where the retail store comes into play. A lot of the bikes sitting In our showroom right now are … Probably the average of there is 7,000 dollars.

We’ve got a demo bike program where you can show up in the shop, it’s 95 bucks for 24 hours. You can actually take any of the bikes out, ride the thing, we have a bunch of awesome, local mountain bike trails right around the shop. You can actually ride the bike for an entire day or a whole weekend, whatever you want to do. Then the money you spend on the demos … Let’s say you spend 95 bucks for a one day demo, that goes right towards your purchase of a bike or a frame.

When you’re serious about it’s no question, “Oh, 95 bucks, I can ride the thing before I spend seven grand on it?” People love that. Most people spending that kind of money really enjoy that which is where the retail store comes into play and that revenue works good out of there. People come in, they actually demo these things. You know, they might demo two or three in our showroom. They might go to some other shops in a 100 mile radius, and drive around, and demo some other bikes, and test out a bunch of different brands, and make a purchasing decision based off of that.

Sometimes there’s a pretty long sales cycle to the thing, which is why bikes are just something that doesn’t move super fast but components are something that people are more willing to just, “Oh, that’s awesome,” and look at the specs, and look at it, and, “Oh, I want it,” and they just impulse buy it.

Felix: Yeah. These long sales cycles, I think the concern that people have when they’re entering an industry like this is how to they [inaudible 00:32:24], how do they stay in the mix when people are going through these purchase decisions? Because the more time a customer has, the more opportunities they have to essentially bump into your competition, bump into alternatives. What do you guys do to make sure that you are in the mix then, that you are going to be considered amongst the competition when it’s a longer sales cycle?

Jeff: Yeah. That one is pretty tough and I think the best thing that we’ve executed on to stay top of mind in the consumer’s mind is really focusing on the stuff they buy often, right? The consumables. Whether it’s tires, or grips, or break pads, or just component upgrades. If we’re selling that to them all the time, when it does come at one time a year, twice a year, when they’re going to buy a new bike or a new frame, they remember us because they’ve had a good experience shopping with us before and then, of course, content is huge.

Generating content around the bikes that we sell it big, generating content around the components that they’re going to buy. We do a lot with our blog and that really drives a lot of organic traffic to our site and that’s pretty much how we stay top of mind in that sense is putting out good content and trying to get as many of those small sales in between the big sales as we can.

Felix: I like that, that you’re almost training the customer to keep on returning to you to buy the larger, more expensive products because they’re use to buying the less expensive products. You know, speaking of the content that you create, the more expensive a product, the more education required. Like you were saying earlier, people want to read reviews, watch YouTube videos, or in your case with a physical retail store, people want to come and actually try it out, go through these in person demos. Now, for the online portion I think most of this are operating online only stores. How do you approach the content you create? How do you know what kind of content or how do you decide what kind of to create around your products?

Jeff: I think when we make the decision of what kind of content we’re going to create we have a little bit of a rule book that we like to follow and one of it’s … Us being a retailer we’re always trying to be kind of the first person to create content. That makes a huge difference is … If something is going to get released and you have a relationship with the manufacturer and they say, “Hey, we’re going to publicly release this new version of this product or brand new product entirely on this date and here’s all the information about it; create your content now and you can post that live on January 25th at 12:01,” we’ll do that. It’s knowing your industry, right?

One, being the first person to create content is always kind of the holy grail because generally you get really favored in Google when you do that and it’s just knowing the industry. We’re the real deal, everyone here rides bikes including myself, and we’re all really into it, and uses the stuff every day, and we all look at all the industry news and media sites and we’re just up to date on the stuff. We know the popular stuff, we know what’s trendy. We know what customers are looking at because it’s the same stuff we look at.

When manufacturers release a new product we’re just as intrigued as anyone. I think that’s what’s cool about being in this industry is a lot of guys … All the guys that work here are passionate about it. It’s even pretty funny to me sometimes. Someone will release a new crank set which is nothing super exciting but it is if you’re a diehard mountain biker. We can promote content around it. We know it’s an incredible product, we know it’s going to sell well so that’s where we put time creating the content.

The first batch of them show up here to go into inventory and everyone’s like, “Hey, these [inaudible 00:36:22] cranks are here,” “Oh, really?” Then everyone goes and looks at them which is pretty funny. It just shows that we’re passionate about it and we know about it. When you’re passionate about the industry and you understand what’s going on in the industry you usually are going to have a good idea of what the consumer wants to see and what they’re Googling.

Felix: That makes sense. Now, you mentioned earlier about how you believe the industry and, definitely not elusive just to your industry, but omni channel is a big … I think the future for marketing and sales for any industry. How do you guys manage it because you have the retail store, you have the online store, and I think I heard you mention earlier about third party marketplaces. How do you manage all of that, basically all those channels for you?

Jeff: That boils down to, of course, being pretty darn organized makes a difference there but there’s a piece of software we use call channel advisor and they’re sort of a multichannel inventory management piece of software and it’s pretty expensive stuff depending on the … It’s kind of revenue based and the amount of SKUs based and things like that. There’s some competitors out to them as well that might be a better fit for different particular situations but, yeah, the one we use is called channel advisor.

That’s kind of our inventory hub. From there we house all of our inventory data within channel advisor and that’s how we know what’s in the retail store, and how we can rank people up through that, and it’s how we the push that product data to eBay, Amazon, Jet, and Shopify. That’s kind of the biggest secret there is you definitely have to use quality software because if you’re trying to do any type of omni channel operation, even just two online channels, and you don’t have a good, quality piece of software that’s helping you manage the inventory and keep those inventory levels synced across all the channels, I mean, that’d be a total nightmare. It would make it impossible.

I think part of the reason why we’ve had some pretty good success against our competitors is because we’ve done a better job at utilizing software, and making sure that our inventory levels are synced across the different channels, and making sure they’re posted properly, and just managing that data is huge. That’s a big piece to the omni channel puzzle is just having a good piece of software to back you up.

Felix: You are selling on so many marketplaces and on the online store, on the offline store. I’m sure that you don’t have the same types of products in the physical retail store as you do … On your own store as you do on the marketplaces. How do you decide what to sell where?

Jeff: Yeah, the way we kind of do that … We try to keep our website a little bit more niched to our target audience as much as we can. We don’t want to clutter it too much with products that we don’t really think make sense to the visitors. We just want to kind of do our best to narrow down the product breadth that’s actually on the website. The if it’s other random things, like some of our distributors sell other kind of off the wall items. One of them also carries a little bit of camping gear or stuff that’s like a different type of cycling like triathlons and stuff. There’s a lot of specific try gear.

It’s not really our core competency so it’s not really something we want to get on our website but it might sell really well on Amazon or eBay so we just kind of post it there. We’re kind of just pick and choosing. A lot of that’s brand based, right? A lot of the brands we deal with, you know, this brand here, they just are in the high end mountain bike scene so we know they’re going on the website. This brand here, all they do is high end triathlon gear so it’s probably not the best fit for the website but we’ll post some of that stuff to third party marketplaces.

Felix: Can you say more about why you keep the products on the store niche and have a narrow catalog?

Jeff: Yeah. That kind of goes back to that thing we were talking about earlier about the identity of you as a retailer. You know, of course it’s beneficial for the customer … It’s kind of tough, right? Because there’s that thing like customers want a huge selection and that’s one of those things your Jeff Beso’s say, right, where as people go to Amazon because they have everything. If you want to compete with Amazon, yeah, put everything on your website, but if you’re trying to go deep in your audience then you don’t want to have too much random stuff on there.

You want to just focus on your target market. You think, what’s your ideal customer and what do they want to see on your website? Put that on there. What don’t they want to see on your website? What’s something that you can put on your website that they would see and they’d be like, “Oh, I should totally buy that or something you could put on there and be like, ”What the heck is that doing on there?" It just gets in their way. That’s why we kind of focus on making sure we niche down the product selection on the website.

There’s a ton of products on there but there’s a lot less on there than there is on third party marketplaces for us because of that reason, because we don’t want to clutter it up with stuff that doesn’t really make sense and fit with our brand as a retailer. On a third party marketplace it doesn’t really matter because it’s … When you buy on Amazon, you think you’re buying on Amazon. You’re not creating that intimate connection with the consumer whereas when they hit your website they want to know who you are and they want to feel cool about that and feel good buying from you. That’s how you’re going to create loyalty as well so that’s kind of why we niched down the website products spec.

Felix: You mentioned that you also sell on jet which is, I think, the first time I’ve heard anyone on the podcast talk about selling on Jet. Tell us about that. What has that experience been like?

Jeff: Man, I think I could do a whole nother podcast on that topic because it’s pretty funny but Jet was interesting. The reason we went on jet was … Channel Advisor had put together an integration with Jet and kind of just offered, said, "Hey, you’re a Channel Advisor customer, you can list on Jet really easy. Jet initially was only accepting … I think they might even still do it. I think you can only sell on Jet if you use some type of inventory management software that has an API with Jet.

It’s not like eBay where you can just go on there and post things. There’s not a user interface in the back end to do that. It’s all done through an API. That’s how it was. I don’t know if it’s still like that but I think it is. Channel Advisor kind of just offered it up and we started … I think one of our competitors did it and we started noticing that sometimes we would Google something and we’d see a Google shopping result from Jet and we’re like, “What the heck?”

Of course it’s one of our competitors on there so we’re like, "Well, we might as well go on there because it doesn’t take any time and it didn’t cost us anything to just post a bunch of products to Jet using a data feed we just sent the stuff to Jet. The interesting thing was when Jet was in their big, guns a blazing customer acquisition strategy, they were just … It didn’t really matter what was on there, they were bidding on it for Google Shopping. Obviously nobody’s going to Jet to buy mountain bike parts, just not a chance.

However, if people are googling something specific, and we have it posted on Jet, and Jet does the bid for it for Google Shopping then we might actually end up selling it on Jet. That’s what we did. It worked. Stuff was selling on Jet. We had some pretty good success with it and it was like, “Wow, this is interesting. I have no idea why people are buying this stuff on Jet,” but we kind of did know because they’re just obviously finding it through Google Shopping because Jet is just doing these crazy bids on Google Shopping just to get customers to buy from Jet. We thought, “Well, that’s interesting,” and it’s cool, and it went along for a while.

Then all of the sudden it just tanked and it’s like we never really trusted that it wouldn’t do that but it tanked because … You know what was funny was it was shortly before they were acquired by Walmart. Obviously I don’t know the internal business intricacies of Jet but I’m sure it had something to do with them backing off on their customer acquisition spend and focusing elsewhere. Now Jet is a very dismal sales channel for us. It still sells some but pretty small. It was an interesting ride with Jet and how they were just doing Google Shopping for anything you put on there.

Sort of the more funny stuff is they had a … Some manufacturers have minimum advertise price policies where they say, “You cannot sell this for less than 100 dollars. That’s our policy. Period.” We would send the data to Jet and we’d say, “Hey, Jet. Post it at 100 dollars.” Then we’d expect a 15 percent fee just like Amazon. We’re expecting 85 dollars back if that thing sells. The product would sell, we would get or 85 dollars, but Jet would actually sell it for 95. They were cutting into their own margin just to sell the thing below the minimum advertised price that was specified by the manufacturer.

They pissed off all these manufacturers in the bike industry because we were telling them to post it at this price and they just wouldn’t and they would just take it out of their own commission. Then all these manufacturers said, “Well, you can’t sell on Jet, period.” They told that to every single retailer. I mean, that was probably five or six manufacturers came to that conclusion: “You cannot sell on Jet. We hate that marketplace.”

It was a wild ride. It was crazy to see what Jet did, how they started. I’m really interested in the business side of what happened there and their massive acquisition from Walmart was interesting. Mark Lore, the guy who started it, is pretty much an e-commerce god so it was pretty cool to see what happened with the company and interesting to be a retailer on there to see how it all went down.

Felix: Yeah. That is interesting. Do you also do Google Shopping yourself directly too?

Jeff: Yeah. Google Shopping is a big thing for us. That’s one of our best things because, for us, we have a lot of long tail keyword stuff. When people are searching for the products that we sell there’s a lot of different models, sub-models, sub-sub-models, so there’s a lot of specifications to the product for proper fit and things like that. Google Shopping really does well in that sense. Our biggest advertising spend goes to Google Shopping. We don’t manage it ourselves anymore. We tried and struggled with it.

We outsource it to a firm now that’s called Conversion Path. I think they’re out of Ohio. Super cool guys. They’ve actually done a phenomenal job. One of the guys who works here now, he came from a company called BTO Motocross and pretty much the same stuff we’re doing but with motocross apparel, and parts, and things like that. That company, I think they were about a 30 million dollar a year, from what I remember, e-commerce company in the motocross industry and he came from there. That company had been using, BTO had been using Conversion Path for quite sometime so we had a good referral there and we started using Conversion Path and they manage all of our Google Shopping for us and it’s been phenomenal.

I mean, shout out to those guys. They do an incredible job and I don’t have any idea how we could do that internally. I mean, I don’t know if we could even financially do it internally for how good they’re doing it for us. Yeah. That’s how that’s managed. We don’t actually do that ourselves. We kind of just oversee it and, you know, we use a firm to conquer all the Google Shopping complexities.

Felix: Yeah. A lot of stores will start off trying to figure out [inaudible 00:47:59] themselves just because of budget issues and they need to kind of learn about their industry a little bit more, a little more about their customers, but you started that way as well then you moved onto the agency. Tell us a little more about that process? How do you work with an agency when it comes to having them run your essentially paid ads program. How do you work with them to ensure that it is a success.

Jeff: You know, it was really hard and it really, I think, boils down to just who you’re doing business with. I think there’s a lot of marketing agencies out there that are really good at the smoke and mirror came and they just don’t actually perform. We experienced some of that. It was interesting for our business, the first couple of years in business we really didn’t do any advertising.

The first two years in business we didn’t have a website, an e-commerce website yet, and we were just pushing stuff on predominantly eBay, and through emails, and an on forums, and hustling anyway we could move product. Our business grew pretty quickly just because of third party marketplaces and us being talented at utilizing data and getting it on different places. Then once we got Shopify set up and we go our e-commerce site dialed in then it was like, “Okay, well now we need to drive traffic to this site.”

It was tough. We went through a couple agencies, I think two or three agencies, and they were just awful. They just wasted money, they didn’t know what they were doing. Some of them were better than others at pretending they knew what they were doing. They were very, I don’t know, very vague with their reporting and it was really hard. It was legitimately very challenging to find an agency that new what they were doing. We, of course, try to do it internally as well. We tried to do our own data feed and do Google Shopping ourselves and just, we were wasting too much money and not seeing that much return on it.

It was pretty tough and that’s why we … When Michael here came over from BTO he already knew Conversion Path was a great agency because BTO had been using them for years and and we kind of just lucked out, right? We learned about conversion path and finally gave a swing and gave them a try. They just performed. They did a great job. They were extremely thorough with reporting. I think the biggest tip I could give you if you’re looking to go with an agency, the biggest thing you’ll notice is an agency usually that doesn’t know what they’re doing, they’re very focused on revenue. “We brought you all these sales.”

An agency that knows what they’re doing is very focused on profit. That’s how Conversion Path it. I think Conversion Path was actually founded by a guy who was a CFO of a company prior. They’re very focused on profit. They’re very focused on giving … Every single report has a very good breakdown of your actual ROI and it’s a net profit figure so it works … That’s one of the biggest things. A lot of agencies will just … Trust me, you can lose a lot of money and sell a lot of product using Google.

Actually selling a lot of product and not eating all of your net profit up doing it, that’s a lot more challenging. Finding an agency that actually cares and won’t even mention the word net profit, you’re probably in good hands. Most of them don’t even say the word net profit, they just talk about how much revenue they brought in. Yeah. It was really hard. It was challenging for us and we lost a ton of money messing around with agencies that just didn’t know what they were doing.

Felix: There’s that joke that it’s easy to make a million dollars if you spend ten million dollars, right?

Jeff: Yeah. That’s true.

Felix: It’s how do you get the actual positive ROI on your ad spend that’s the most important, that’s the key really to using paid ads. Can you give us an idea of the growth or success of the business today since you started in 2011? It’s been six years now, six years in business. Give us an idea of how successful the business is today.

Jeff: We’re doing pretty good now. We just closed 2016 at five point three million in revenue for that year. That was a 35 percent year over year growth from 2015. As far as orders go, we shipped about 34,000 orders in 2016. We’ve still got a 100 percent positive feedback on eBay and 99 percent on Amazon so we’re pretty proud of that. We’ve got some great revues on Google, and Yelp, and Facebook. There’s ten people here and we’re in about 5,000 square feet location now.

We will be opening up another shop in Pennsylvania, all the way on the other side of the country, and yeah, we’ve got some pretty audacious goals to keep growing the thing. Yes, it’s gone great. It’s been a lot of hard work but it’s been incredibly fun learning and just pushing forward with it as I’ve gone through the process of growing the business. Yeah, it’s a decent size now and we’re continuing to grow it and have a lot of fun with it most importantly.

Felix: One thing you mentioned to me over email was that, “Working hard is not enough, you also must learn hard.” Can you say a little more about this? What do you mean by that?

Jeff: Yeah. To me that’s the most important thing that I think is overlooked. There’s so much talk … I mean, it’s pretty obvious. If you get into the entrepreneurship world you start reading books about entrepreneurship and business and all that sort of stuff. I mean, you’re going to hear, “Work hard,” until you can’t stand to hear it anymore. It’s just kind of a given these days. You’ve got to work hard no matter what you’re doing, whether you’re trying to be an entrepreneur or you’re trying to be successful in the corporate world you got to work extremely hard.

The biggest game changer for me was learning. It’s all knowledge. I think a lot of what I credit the success of this business to is me just being proactive about learning. It’s reading books and the guys that work here too, the team here, doing everything I can to motivate them to read books and it’s incredible. You can learn so much … It’s not just books. It’s just quality content in general. Whether it’s listening to great podcasts, or watching YouTube videos, or going to meetups, or getting involved in other entrepreneurship organizations, things like that. You just have to learn.

If you really look at what’s the difference between you and somebody … Say your vision for yourself, you know, everyone’s got a different vision and goals, but say your vision is to be an entrepreneur who runs a 50 million dollar annual revenue company. The difference between you and that person is just knowledge. He just knows how that thing was built, he understands business better. You know, he has so much more knowledge of the market in general and knowledge is just huge and actually just putting that knowledge to use it obviously a key factor there but I’m going to assume that’s an assumption that people make.

Yeah. That’s kind of how I feel about that. I think that I’ve had epiphany after epiphany by reading books, by working with business coaches, by getting involved in entrepreneurship organizations and meeting brilliant people that were way ahead of my success level, and knowledge level, and that’s just so important. I think anyone listening to this podcast is doing a good thing. They’re listening and consuming good content that might help them grow their own e-commerce store. Working hard is a given but learning hard is kind of a secret that I think a lot of people miss.

Felix: Yeah, I think maybe a good question to close on is how do you actually make sure that you use the stuff you learned? I think a lot of times aspiring entrepreneurs, first time entrepreneurs, spend a lot of time learning but then don’t put it into action and just kind of spend all their … Waste a lot of time. I guess it’s not really wasted but they spend way too much time on the learning phase and don’t move into the execution phase. What’s worse for you?

Jeff: For me, I think habits are the biggest thing, you know? You can read a book called The Power of Habit. It’s pretty insightful about that but if you can read a book and every time you … You just have to be conscious about that. You have to be conscious about while you’re reading this book, and learning, or listening to this podcast, or watching YouTube video, you have to be conscious that your goal is to find nuggets of knowledge that you can actually implement into your own life.

That’s your goal. That’s your goal is to find those nuggets of knowledge you can implement in your own life. That’s your goal with this content. Now, consume that content and every time you see, “Oh, that’s interesting, I could probably make this change and actually implement that in my own life,” just execute on it. Write that down. Just have that goal when you go into it, when you first start consuming that content and once you have that goal you’ll find those nuggets that you can implement in your own life. The best way to do it is to set up a habit, right? Find something that you can set up a habit or maybe it’s just a one time thing, write it down and just use some willpower and execute on it.

I think that’s a personality thing too. Obviously a lot of people read books and get all amped up and then don’t do anything about. It. I don’t know. I think that’s a habit too. Once you get into a good habit of consuming content and specifically looking for nuggets that you can pull out of there and put into your own life you get into a good habit of doing that, and a good habit of actually finding those nuggets of knowledge, and executing on them and it just kind of snowballs from there.

It’s all a habitual thing, once you get to that habit of doing that you continue to find them in more content you consume and it continues to make your life and your business better and that’s kind of the goal. For me, I’m always interested in anything that can make my life better whether it’s something very simple or it’s some drastic change. I really like to think long thoughts about those type of things and then do my absolute best to execute on them.

I think that’s different for every person. Obviously it requires willpower to execute on the stuff you learn, but what’s useful is just knowing that your goal when you consume content is to take something away from it that you can actually implement in your own life. I kind of tried to do that in the company here. I put together a World Wide Cyclery reading program so all the employees here, they actually get 20 dollars an hour to read a book and that time is based off of the audio book time.

There’s a couple caveats. The first one is it has to be recommended or approved by me, and when they’re done with the book they have to send me a little book report in an email about what they thought of the book, and then three things they’re going to pull away from the book that they’re going to implement into their own life. I’ve put that in place here to kind of inspire people to read and enjoy it. It’s been going now for about six months and it’s working pretty well.

I thought it would work a little better since I thought the cash incentive was pretty good but a lot of the guys here are not … You know, they’re not money hungry. It’s not the finance industry so they don’t care as much about that but a lot of them are reading books. I love watching the guys here, anybody, learn something and put it to use in their own life. That’s inspiring to me but, yeah, just trying to sum up what you learned and then just be diligent about actually using that knowledge. That’s huge. Super important.

Felix: Awesome. I think that’s great closing advice. Thanks so much again for your time, Jeff. Worldwidecyclery.com, again, is the website. It’s a store, also have a retail store you can check out. I think you’ll find that on the worldwidecyclery.com. What else do you recommend our listeners check out if they want to follow along with what you’re up to?

Jeff: Yeah. You know, our Instagram is pretty cool. It’s obviously pretty tailored to a bunch of high end bikes and fancy stuff there. I’m on Facebook as well. Jeff Cayley, J-E-F-F, last name, C-A-Y-L-E-Y. I honestly don’t personally partake in the Twitter, or Instagram, or much Facebook at all myself. Our company does and cares about that but, I don’t know, it’s not a big thing for me but if anyone does want to connect with me I am on Facebook and, you know, always love chatting e-commerce and business.

Felix: Awesome. Thanks again for your time, Jeff.

Jeff: Yeah. Thank you, Felix. Appreciate it.

Felix: Here’s a sneak peak of what’s in store for the next Shopify Masters episode.

Speaker 3: People aren’t necessarily going to eBay to search for a niche product unless it’s a gift or they’re really intent on finding this product. Usually we’re usually the first ones to even get to the market by showing this in their newsfeed. Some of these people have never even seen some of these products before. That’s usually our first golden nugget right there is that showing those products first before they can actually search on Amazon, on eBay, or AliExpress. It gives us a head start to the market.

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About the Author

Felix Thea is the host of the Shopify Masters podcast, the ecommerce marketing podcast for ambitious entrepreneurs. Got something to share with Shopify Masters listeners? You can submit your story for consideration.